Rail budget is high on intent but falls far short of time-defined plans

Consistent with sky-high expectations of Modi sarkar, it was hoped that rail budget 2014-15 would indeed chart a new direction, delineate a bold plan, as envisaged in President Pranab Mukherjee’s address to Parliament, for a radical restructuring of Indian Railways, which is not merely an important infrastructural behemoth, but the nation’s lifeline.

Rail mantri Sadananda Gowda’s budget constituted a litany of familiar platitudes instead — firstly an epitaph of the institution of a separate rail budget itself, thus denying himself the “nasha of claps in the House”, and secondly a crisp description of the vision for IR to be an infrastructural bulwark for the economy. Bristling with contradictions and uncertainties, the Gowda budget, no doubt high in intent and a reminder of the enormity of responsibilities devolved on IR, falls far short of time-definite action plans.

There is an endemic gridlock in railways, a broken asset. Teetering and faltering, IR continues to wallow in the pernicious dynamics of status quo, whose potential remains to be unlocked by bold political leadership and a dollop of capital. If that potential was unleashed, IR could puff hard and add some 2% to India’s flagging economic growth.

While alluding to IR’s plight of “how revenue was frittered and investments were misdirected”, Gowda implied that no organisation can afford to get stuck in time, history or geography. No doubt the last two have been decades of disaster, letting IR slip, afflicted by the twin scourge of ministerial profligacy and technocratic pusillanimity, preventing IR from following simple business norms of optimally pricing its services and judiciously restructuring investments.

Why should government feel shy of radical initiatives? Why should new good money chase old bad investments? Why carry forward the unsustainable overburdened shelf of projects, some languishing for decades, including unviable throw-forwards, some of them of 1974-75 vintage?

IR needs to sprint. Just jogging will at best keep it where it is. Traffic for rail has been smothered; capacity crunch has been endemic. IR now moves only 10% of the country’s passenger traffic and less than one-third of its freight. As the National Transport Development Policy Committee has just revealed, the non-optimal intermodal distribution owing to IR’s declining share in the transport market causes a loss of 4.5% of GDP to the national economy. Most expert bodies have argued for IR to achieve an optimal 50% share in country’s freight market by end of 15th five-year Plan.

Minister Gowda referred to “structural reforms” of the Railway Board. Ever since the birth of Railway Board, IR structure has remained much the same — hierarchical and feudal. Operational silos have eroded IR’s energy and vitality. The present departmental structure results in compartmentalisation and concomitant ills.

Even with 12,000 passenger trains carrying 23 million travellers daily, IR has only 10% market share of country’s passenger business, which keeps shrinking. It needs to substantially expand and modernise its infrastructure, stations, pre-board and on-board services. It must urgently upgrade its wherewithal well ahead of the completion of exclusive freight corridors to ensure 10-12-hour journeys on the 1,500 km Delhi-Mumbai/Delhi-Kolkata Rajdhanis (as envisaged 50 years ago), and three-hour travel on Shatabdis covering 400-500 km routes.

A clear imperative for IR is to create capacity and accelerate asset velocity with proactive maintenance rather than reactive repairs, attempt to leapfrog by piggybacking on new technologies along with new genre managerial ethos, redimension freight and passenger businesses which too must be segregated for appropriate focus, earn much more and save as much, generate substantial investible surpluses through increased volumes, dynamic pricing, substantial downsizing, and pare down unit cost of operation.

Over 10% of the existing rail and road network capacity can be unlocked by upgrading existing assets, ensuring a zero failure of fixed and mobile assets. With many zonal administrations recently added on the system, IR, like China Rail did in 2004, is well advised to opt for empowered stations, depots and centres functioning directly under the zone, removing the intermediary divisional layer.

Rail budget rightly emphasised the dilemma IR faces — of “tightrope walking by balancing” conflicting objectives of a commercial enterprise and social obligation. IR must shed the ambivalence inherent in its perceived role of a departmental undertaking with public service obligation and instead have an unambiguous commitment to being a corporate entity with inalienable responsibility to carry the nation’s freight and passengers efficiently and economically. It must drastically prune concessions and subsidies, continuing only those that genuinely reflect corporate social responsibility.

Railway minister has relied heavily on PPP for IR’s ambitious development schemes. Private capital has been hard to come by. It is incumbent that IR identifies and addresses all organisational and institutional deficiencies inhibiting PPP. There is little justification for IR to continue to commit its scarce resources to in-house manufacture of much of its rolling stock and other equipment, when these have failed to modernise and have fallen steadily behind commercially operated alternatives. Its moribund research and development outfit is similarly in need of immediate revamp and reorientation.

Modi sarkar must not miss the train. As an old patient, IR has had plenty of prescriptions, but continues to resist bitter medicines. The recent electorate mandate has been for a radical, swift restructuring, not merely mundane, incremental changes, for real spring-cleaning, not mere window-dusting.